Audit (AUD) CPA Exam

One of the more well known parts of the Certified Public Accountant (CPA) exam is the Auditing and Attestation (AUD) test. According to the AUD CPA exam blueprint, this CPA exam section focuses on auditing procedures, attestation engagements, and the knowledge of how to apply them in a professional setting. 

You’ll also need to know the standards and regulations set by the governing bodies for CPAs. This includes the American Institute of CPAs (AICPA), Public Company Accounting Oversight Board (PCAOB), and more. This is all fairly standard information for an auditor— so if you’ve worked in that field this area will be easy for you.

Still, it’s entirely possible to pass the AUD exam without an auditor’s background. You just need to carefully study the topics included in the test. If you can do so successfully, you should be able to pass and move on to another CPA exam portion without any troubles.

Much like the REG and FAR exams, the AUD exam is graded on your answers to two sets of multiple choice questions and three sets of task based simulations. Grading is split 50/50 between the two question types.

In terms of structure, the exam is made up of 72 MCQs and 7 TSBs. Passing the exam requires you to score at least 75%. Luckily for you, you should easily be able to do so if you understand the following course concepts.

AUD Exam Format

• Exam Time Limit: 4 Hours
• Multiple Choice Test: 90 Questions, 50% of total score
• Task Based Simulations (TSBs): 7 TSBs, 50% of total score
• Test Segment #1: 36 Multiple Choice Questions
• Test Segment #2: 36 Multiple Choice Questions
• Test Segment #3: 2 TSBs
• Test Segment #4: 2 TSBs
• Test Segment #5: 3 TSBs

AUD CPA Exam Topics

1. Ethics, Professional Responsibilities and General Principles: 15-25% of the exam
2. Assessing Risk and Developing a Planned Response: 20-30% of the exam
3. Performing Further Procedures and Obtaining Evidence: 30-40% of the exam
4. Forming Conclusions and Reporting: 15-25% of the exam

As you can see, the AUD section is heavily based on applying your knowledge of auditing and attestation concepts into real world examples. That’s why it’s important that you have all the relevant knowledge ahead of time. In order to be prepared for the exam, you’ll want to focus on learning everything listed in the following areas.

All information included in these segments come directly from the official AUD CPA exam blueprint.

Required AUD Exam Skills

• Evaluation: 5-15%
• Analysis: 15-25%
• Application: 30-40%
• Remembering and Understanding: 30-40%

Ethics, Professional Responsibilities, and General Principles

The first thing you need to know is an overview of the ethics, principles, and responsibilities involved in being a professional auditor. This area is one of the more complicated parts of the exam simply because of how much you need to know. Keep the following topics in mind during your future study sessions.

• Nature and Scope of Engagements: Understanding how the various types of audit and non-audit engagement types can be applied to the real world, such as:
  • Audit Engagements: Understanding the different kinds of audits a licensed CPA will typically be expected to perform: internal control audits, compliance audits, financial statement audits, federal grant recipient audits, etc.
  • Non-audit Engagements: Attestation engagements (Ex. examinations, reviews and agreed-upon procedures engagements), Accounting and Review Services engagements (Ex. preparation, compilation and review engagements) and reviews of interim financial information
• Ethics, Independence and Professional Conduct: Requirements under the AICPA Code of Professional Conduct and professional and independence requirements of the Securities and Exchange Commission (SEC), PCAOB, GAO and DOL; concepts related to professional skepticism and professional judgment
• Terms of Engagement: Preconditions for accepting an audit or non-audit engagement and the terms of engagement and engagement letter 
• Engagement Documentation: Requirements for engagement documentation for all types of audit and non-audit engagements
• Communication Requirements: Understanding the requirements for communicating with management, those charged with governance, component auditors and other parties
• Quality Control: Understanding of quality control at the firm and engagement levels

As you can see, there’s a lot you need to remember. However, this isn’t as complicated as it looks. Most of the concepts here are fairly straightforward and can be understood with common sense, such as the ethics requirements. 

Just keep a clear head and give yourself plenty of time to study this area. You should be just fine as long as you don’t stress yourself out!

Assessing Risk and Developing a Planned Response

For the next AUD section, you’ll need to learn the steps involved in the engagement process. This includes the first steps of planning the engagement, as well as risk management. Plus, you’ll need to learn the procedures involved in creating risk averse processes.

To be more specific, you need to know everything on the following list:

• Planning the Engagement: Understanding the engagement strategy and developing a detailed engagement plan
• Understanding an Entity and Its Environment and Understanding Internal Controls Over Financial Reporting: Developing an understanding of an entity and the risks associated with the engagement, understanding an entity’s internal controls, and evaluating the effect of internal controls on an engagement
• Assessing Risks and Planning Further Procedures: Identify/assess the potential risk of making a fraud or error-based misstatement, as well as developing appropriate engagement procedures and incorporating audit data analytics, group audits, help from specialists, etc.

Pay extra attention to this area for future use. It may only be 20-30% of the exam, but all the information here will be very valuable when you’re working as a CPA. If you can keep this in mind after the exam, then your work will go very smoothly.

Performing Further Procedures and Obtaining Evidence

Area 3 of the AUD exam section asks you to understand how to perform engagement procedures and assess how viable the information you gained is and how best to use it. Because of that, you need to know several methods for gathering data.

Here’s a general overview of what will appear on area 3 of the AUD exam.

• Understanding and using audit evidence
• Sampling techniques
• Procedures used to obtain useful evidence
• Special matters that require individual consideration (Ex. accounting estimates and litigation)
• Misstatements and mistakes in internal controls due to error or fraud
• Written representations
• Identifying and responding to subsequent events and subsequently discovered facts

Area 3 is easily the most important part of the CPA AUD exam. It covers roughly 30-40% of the exam’s content and is too complicated to fit into one document. Make sure you study this area heavily. There’s a lot to remember, but if you give yourself enough time you should learn everything you need.

Forming Conclusions and Reporting

Finally, area 4 of the AUD section is all about what you do with the information that you’ve gathered through each process. As a result, you’ll need to know how to interpret the data you have and figure out how to apply it to your work. There are several different ways of doing so, but the ones you need to know fall under the falling categories:

• Reports on auditing and attestation engagements
• Accounting and review service engagements
• Reports on business compliance

There are more general areas you need to keep in mind too. Namely, you need to keep consistency, supplementary information, and special considerations in mind when you’re making any reports. Lots of people get tripped up in that area, so you should keep that in mind when preparing for this exam section.

AUD CPA Exam Strategies

Need a little more help getting a passing score on the AUD CPA exam section? Here are some quick tips to help you CRUSH the AUD section of your exam!

• There’s some overlap in tested material between the FAR and the AUD exam sections. I would recommend capitalizing on that by taking the two exams close together. That way your preparations can carry over into the next exam. But you shouldn’t use that as an excuse to slack off on studying— both CPA exam sections still have plenty of unique concepts that you need to master.
• Easily the best way to prepare for an exam is to take practice tests. Doing so gives you effective experience with the testing process and it helps you remember important test concepts. Including a similar time limit to the AUD exam will also help you work on your time management skills. If you want a study resource with the most practice tests, we recommend Gleim CPA Review.
• This final tip can’t be overstated— do not cram the night before the test. A good night’s sleep will serve you much better, especially when combined with a good breakfast the next day. Any extra information you get won’t be worth entering the test tired. Take good care of your body and the exam will be much easier to complete.

If you remember these tips and learn everything mentioned in this article, you’ll have a good chance of passing the AUD exam on your first try. Ultimately, remember to take your time when learning; you have 18 months to get all of the tests done.

Good luck!